U.S. SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                   FORM 10-QSB

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

                          MONTGOMERY REALTY GROUP, INC.

                NEVADA                                     88-0377199
    (State or other jurisdiction of                      (IRS Employer
     incorporation or organization)                    Identification No.)


                        400 Oyster Point Blvd., Suite 415
                          South San Francisco, CA 94080
                    (Address of principal executive offices)

                                 (650) 266-8080
                         (Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

The number of shares  outstanding of the registrant's  common stock as of August
8, 2000: 16,500,000

<PAGE>

                          MONTGOMERY REALTY GROUP, INC.

                              INDEX TO FORM 10-QSB

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance Sheets as of June 30, 2000 and December 31, 1999...........3

         Statements of Operations for the six months ended
         June 30, 2000 and 1999.............................................4

         Statements of Operations for the three months ended
         June 30, 2000 and 1999.............................................5

         Statements of Cash Flows for the six months ended
         June 30, 2000 and 1999.............................................6

         Notes to Financial Statements......................................7

Item 2.  Management's Discussion and Analysis or Plan of Operations.........9

                           Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K..................................13

Signatures.................................................................13

                                       2
<PAGE>
<TABLE>
<CAPTION>

MONTGOMERY REALTY GROUP, INC.

BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------------------------------

                                                                                             June 30,       December 31,
                                                                                               2000             1999
                                                                                            -----------     -----------
ASSETS

PROPERTY:
<S>                                                                                         <C>             <C>
  Land                                                                                      $ 2,699,500     $ 2,699,500
  Building                                                                                    5,040,000       5,040,000
  Improvements                                                                                3,279,384       3,279,384
                                                                                            -----------     -----------
           Total                                                                             11,018,884      11,018,884

  Less accumulated depreciation                                                              (2,612,806)     (2,505,378)
                                                                                            -----------     -----------
           Property, net                                                                      8,406,078       8,513,506

CASH                                                                                             67,249         134,361

TENANT RECEIVABLES                                                                                9,290          31,137

PREPAID EXPENSES AND OTHER ASSETS                                                                51,667          36,949

DEFERRED LEASE COMMISSIONS                                                                       12,902          13,995

DEFERRED LOAN COSTS                                                                             122,004         134,906

DEFERRED RENT RECEIVABLE                                                                         27,180          40,425

DEFERRED TAX ASSET                                                                            1,541,200       1,492,435

TOTAL ASSETS                                                                                $10,237,570     $10,397,714
                                                                                            -----------     -----------

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES:
  Notes payable                                                                             $12,189,132     $12,338,166
  Loan from stockholder                                                                         100,000               -
  Accounts payable                                                                               46,198          67,292
  Accrued interest                                                                               67,017          68,112
  Security deposits and prepaid rent                                                             67,202         103,150
                                                                                            -----------     -----------
TOTAL LIABILITIES                                                                            12,469,549      12,576,720
                                                                                            -----------     -----------
STOCKHOLDERS' DEFICIT:
  Common stock, $0.001 par value; authorized 80,000,000 shares;
    issued and outstanding, 16,500,000 shares at June 30, 2000 and,
    December 31, 1999                                                                            16,500          16,500
  Preferred stock, $0.001 par value; authorized 20,000,000 shares; no
    shares issued and outstanding at June 30, 2000 and December 31, 1999                              -               -
  Additional capital                                                                          1,692,742       1,692,742
  Accumulated deficit                                                                        (3,941,221)     (3,888,248)
                                                                                            -----------     -----------
TOTAL STOCKHOLDERS' DEFICIT                                                                  (2,231,979)     (2,179,006)
                                                                                            -----------     -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                 $10,237,570     $10,397,714
                                                                                            -----------     -----------
</TABLE>

See notes to the financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

MONTGOMERY REALTY GROUP, INC.

STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------

                                                                                               2000            1999
                                                                                            -----------     -----------
REVENUES:
<S>                                                                                         <C>             <C>
  Rent                                                                                      $   712,832     $   683,042
  Other                                                                                             304             498
                                                                                            -----------     -----------
           Total revenues                                                                       713,136         683,540
                                                                                            -----------     -----------
EXPENSES:
  Real estate taxes                                                                              52,586          52,932
  Utilities                                                                                       7,641           5,928
  Repairs and maintenance                                                                        15,276           4,214
  General building                                                                               10,055           8,870
  Administration                                                                                 61,186          36,785
  Insurance                                                                                      11,318           9,824
  Management fee                                                                                 47,500          41,258
  Depreciation                                                                                  107,430         110,174
  Amortization                                                                                   30,513          28,084
                                                                                            -----------     -----------
           Total expenses                                                                       343,505         298,069
                                                                                            -----------     -----------
INCOME BEFORE INTEREST EXPENSE
  AND INCOME TAXES                                                                              369,631         385,471

INTEREST EXPENSE, NET                                                                          (471,369)       (455,946)
                                                                                            -----------     -----------
LOSS BEFORE INCOME TAXES                                                                       (101,738)        (70,475)

INCOME TAX BENEFIT                                                                               48,765               -

NET LOSS                                                                                    $   (52,973)    $   (70,475)
                                                                                            ===========     ===========
NET LOSS PER COMMON SHARE,
  BASIC AND DILUTED                                                                         $    (0.003)    $    (0.004)
                                                                                            ===========     ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES,
  BASIC AND DILUTED                                                                          16,500,000      16,063,889
                                                                                            ===========     ===========
</TABLE>

See notes to the financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

MONTGOMERY REALTY GROUP, INC.

STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------
                                                                                               2000             1999
                                                                                            -----------     -----------
REVENUES:
<S>                                                                                         <C>             <C>
  Rent                                                                                      $   356,841     $   345,095
  Other                                                                                             159
                                                                                            -----------     -----------
           Total revenues                                                                       357,000         345,095
                                                                                            -----------     -----------
EXPENSES:
  Real estate taxes                                                                              27,655          26,466
  Utilities                                                                                       4,387           2,964
  Repairs and maintenance                                                                        12,668           2,107
  General building                                                                                4,524           4,435
  Administration                                                                                 32,116          18,018
  Insurance                                                                                       5,742           4,912
  Management fee                                                                                 25,000          20,659
  Depreciation                                                                                   51,804          55,087
  Amortization                                                                                    7,102          14,042
                                                                                            -----------     -----------
           Total expenses                                                                       170,998         148,690
                                                                                            -----------     -----------
INCOME BEFORE INTEREST EXPENSE
  AND INCOME TAXES                                                                              186,002         196,405

INTEREST EXPENSE, NET                                                                          (239,755)       (227,973)
                                                                                            -----------     -----------
LOSS BEFORE INCOME TAXES                                                                        (53,753)        (31,568)

INCOME TAX BENEFIT                                                                               24,370               -
                                                                                            -----------     -----------
NET LOSS                                                                                    $   (29,383)    $   (31,568)
                                                                                            ===========     ===========
NET LOSS PER COMMON SHARE,
  BASIC AND DILUTED                                                                         $    (0.002)    $    (0.002)
                                                                                            ===========     ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES,
  BASIC AND DILUTED                                                                          16,500,000      16,127,778
                                                                                            ===========     ===========
</TABLE>

See notes to the financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

MONTGOMERY REALTY GROUP, INC.

STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------

                                                                                               2000            1999
                                                                                            -----------     -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                         <C>             <C>
  Net loss                                                                                  $   (52,973)    $   (70,475)
  Depreciation and amortization                                                                 137,943         138,258
  Deferred rent receivable                                                                       13,245          30,757
  Deferred taxes                                                                                (48,765)              -
  Adjustments to reconcile net loss to net cash
    (used in) provided by operating activities:
    Tenant receivables                                                                           21,847            (271)
    Prepaid expenses and other assets                                                           (14,718)          5,884
    Accounts payable                                                                            (21,094)          3,939
    Accrued interest                                                                             (1,095)         13,621
    Security deposits and prepaid rent                                                          (35,948)         18,892
    Other                                                                                             -           3,698
                                                                                            -----------     -----------
           Net cash (used in) provided by operating activities                                   (1,558)        144,303
                                                                                            -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes payable                                                       100,000
  Payments on notes payable                                                                    (149,034)        (19,120)
  Payment of loan costs                                                                         (16,520)              -
  Distributions                                                                                       -         (75,222)
                                                                                            -----------     -----------
           Net cash used in financing activities                                                (65,554)        (94,342)
                                                                                            -----------     -----------
(DECREASE) INCREASE IN CASH                                                                     (67,112)         49,961

CASH, BEGINNING OF PERIOD                                                                       134,361             130
                                                                                            -----------     -----------
CASH, END OF PERIOD                                                                         $    67,249     $    50,091
                                                                                            ===========     ===========
</TABLE>

See notes to the financial statements.

                                       6
<PAGE>

MONTGOMERY REALTY GROUP, iNC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


1.    BASIS OF PRESENTATION

      The  interim  financial  data is  unaudited.  However,  in the  opinion of
      management, the interim data includes all adjustments,  consisting only of
      normal  recurring  adjustments,  necessary for a fair  presentation of the
      Company's  financial  position and results of  operations  for the interim
      period.  Such statements have been prepared from the Company's  accounting
      records in accordance with the instructions to Form 10-QSB,  and should be
      used in  conjunction  with  Montgomery's  Registration  Statement  on Form
      10-SB, as amended, including the financial statements and notes thereto.

2.    TRANSACTIONS WITH AFFILIATE

      Property  management fees of $47,500 and $41,258 were paid to an affiliate
      of the  majority  stockholder  for the six months  ended June 30, 2000 and
      1999, respectively.

3.    BASIC AND DILUTED INCOME (LOSS) PER SHARE OF BENEFICIAL INTEREST

      Basic and diluted  income  (loss) per share are  computed by dividing  net
      income  (loss) by the weighted  average  number of shares  outstanding  of
      16,500,000 and 16,063,889 for the six months ended June 30, 2000 and 1999,
      respectively,  and  16,500,000  and  16,127,778 for the three months ended
      June 30, 2000 and 1999, respectively.

4.    LOAN FROM STOCKHOLDER

      On March  27,  2000,  the  Company  borrowed  $100,000  from its  majority
      stockholder.  The loan bears interest at 10% and is due on March 31, 2001.
      The  proceeds  from the loan  were  used to reduce  the  principal  of the
      Redwood Bank mortgage (Notes 5 and 7).

5.    NOTES PAYABLE

      On March 23, 2000, the $1,999,000  mortgage on the Eccles Project matured.
      The lender,  Redwood  Bank,  extended the term of the loan and on April 4,
      2000, loan extension documents were recorded. The new maturity date on the
      loan is March 31, 2001. As part of the extension, principal was reduced by
      $100,000.

      The $545,000 mortgage on the San Ramon Retail Center originally matured on
      June 1,  2000.  The  lender,  Gross  Mortgage  Company,  has  provided  an
      extension to December 1, 2000.

6.    SALES CONTRACT

      On May 2, 2000,  the Company  entered into a written  contract to sell the
      Eccles  Project  land to Sand  Hill  Property  Company  for  approximately
      $14,500,000. The contract calls for a closing on or about January 2, 2001,
      subject to various conditions,  including the satisfaction by the buyer of
      certain due diligence  contingencies and the Company obtaining appropriate
      planning  department  permits so as to allow the construction of a 200,000
      square foot office building at the site.

                                       7
<PAGE>

7.    SUBSEQUENT EVENTS

      Repayment of Loan from  Stockholder - On August 2, 2000, the principal and
      all accrued interest on the loan from Mr. Maniar was paid in full from the
      proceeds from the  refinancing of the San Ramon Retail Center as discussed
      below.

      Notes Payable - San Ramon Retail  Center - On August 2, 2000,  the Company
      paid off the  $545,000  mortgage on the San Ramon  Retail  Center with the
      proceeds of a new loan in the  principal  amount of $800,000  from a bank,
      secured by a first mortgage on the San Ramon Retail Center. The note calls
      for amortized  principal and interest payments,  with interest rates fixed
      for the  first  three  years at 9.1%.  Amortization  is based on a 30-year
      period,  with the entire  principal and accrued and unpaid interest due on
      July 31, 2010.

      Sales  Contract  - Eccles  Property  - On July 3,  2000,  the  prospective
      purchaser  of the  Eccles  Property  proposed  either to  renegotiate  the
      purchase terms due to an easement  encroaching on the Eccles Property that
      the Company had not removed or to  terminate  the proposed  purchase.  The
      Company  believes  that the City of South San Francisco may now approve an
      approximately 300,000 square foot rather than a 200,000 square foot office
      building as previously  planned.  Such a larger  building  would  increase
      development  and carrying costs until the building is fully leased as well
      as the  potential  financial  return.  The  Company  and  the  prospective
      purchaser  currently are  renegotiating  their  agreement and discussing a
      possible  joint venture to develop an  approximately  300,000  square foot
      office  building.  The prospective  purchaser would buy a partial interest
      rather  than the entire  property,  and the  Company  and the  prospective
      purchaser  would  convey their  respective  interests in the property to a
      joint venture for development.  If a revised agreement is not reached with
      the  prospective  purchaser,  the Company will  continue its plan to sell,
      exchange or develop this property.

                                       8
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operations

Forward-Looking Information May Prove Inaccurate

      This report contains statements about the future, sometimes referred to as
"forward-looking"   statements.   Forward-looking   statements   are   typically
identified by the use of the words "believe," "may," "will," "should," "expect,"
"anticipate,"  "estimate,"  "project,"  "propose,"  "plan," "intend" and similar
words and expressions. Statements that describe future strategic plans, goals or
objectives  of the  Company  are also  forward-looking  statements.  The Company
intends  the  forward-looking  statements  to be  covered  by  the  safe  harbor
provisions  for  forward-looking  statements  contained  in  Section  27A of the
Securities Act and Section 21E of the Exchange Act.

      Readers of this report are cautioned that any forward-looking  statements,
including  those  regarding  The Company or its  management's  current  beliefs,
expectations,  anticipations,  estimations,  projections,  proposals,  plans  or
intentions  are not  guarantees of future  performance  or results of events and
involve risks and  uncertainties.  The  forward-looking  information is based on
present  circumstances and on the Company's  predictions  respecting events that
have not  occurred,  which  may not  occur or which  may  occur  with  different
consequences from those now assumed or anticipated. Actual events or results may
differ  materially from those discussed in the  forward-looking  statements as a
result of various  factors.  The  forward-looking  statements  included  in this
report are made only as of the date of this report. The Company is not obligated
to update  such  forward-looking  statements  to  reflect  subsequent  events or
circumstances.

      The following  discussion should be read in conjunction with the Financial
Statements of the Company and the Notes thereto.

Overview

      The Company is a real estate  company that  emphasizes  investment in both
development  real estate assets and  income-producing  real estate  assets.  The
Company  is  engaged  in  the   ownership,   leasing,   management,   operation,
development,  redevelopment,  acquisition  and sale of real estate assets in the
greater San  Francisco  Bay Area.  The Company  currently  owns retail  shopping
centers and an office building.  The lease space is currently 100% occupied. The
Company  also owns an  undeveloped  parcel of land  referred  to as the  "Eccles
Project" in South San Francisco.  As discussed in more detail below, the Company
currently  proposes  to sell or exchange  all or a part of its  interest in this
property  or  participate  in  the  development  of an  office  building  on the
property. The Company conducts all of its real property management and brokerage
activities through a written agreement with a related  corporation,  Diversified
Investment  &  Management  Corporation  ("DIMC"),  which  is 100%  owned  by the
Company's majority stockholder,  Mr. Maniar. Mr. Maniar currently owns in excess
of 96% of the stock of the Company.

Basis of Presentation of Financial Information

      The  Company's   financial   condition  and  results  of  operations  were
substantially  changed by the acquisition of its four properties from Mr. Maniar
in June 1999.  The  acquisition  of the four  properties  was accounted for as a
"reverse acquisition" whereby, for accounting purposes,  the properties acquired
the  Company  under the  purchase  method of  accounting  and due to the lack of
significant  business  operations  by the  Company  prior  to the  June 8,  1999
acquisition,  the transaction was reported as a  recapitalization.  Accordingly,
the historical  financial statements were prepared to give retroactive effect to
the  reverse  acquisition  completed  June  8,  1999.  Consistent  with  reverse
acquisition  accounting:  (i) the

                                       9
<PAGE>

comparative results of operations for the periods ended March 31, 2000 and March
31,  1999,  therefore  show  revenue  and  expense  from  the  properties  for a
comparative  period,  with the March 31, 2000  operations  also  reflecting  the
Company's  additional expenses of conducting business as a public company;  (ii)
all properties, assets, liabilities and accumulated deficit are reflected at the
properties' combined historical cost (as the accounting acquiror); and (iii) the
preexisting  outstanding  shares of the Company (the  accounting  acquiree)  are
reflected at their net cash value as if issued on June 8, 1999. In addition, the
benefit of deferred tax assets  generated by the  contribution of the properties
to the  Company  with a tax basis in excess of book basis has been  recorded  as
additional paid in capital.

Results of Operations

  Six Months Ended June 30, 2000 and 1999:

      The Company's  net loss for the six months ended June 30, 2000,  decreased
to $52,973 from $70,475 for the six months ended June 30, 1999, or 24.8%.

      The  Company's  total  revenues  for the six months  ended June 30,  2000,
increased to $713,136  from  $683,540 for the six months ended June 30, 1999, or
4.3%.  This  increase  is  primarily  attributable  to two  factors:  (a) rental
payments  commencing  November 1999, under a new lease with AlphaGraphics 503 at
the San Ramon Retail Center;  and (b) rental increases that took effect December
1,  1999,  in the base rent paid by Keker & Van  Nest,  the sole  tenant at that
property.  With the exception of the Eccles  Project land,  all of the Company's
properties are 100% leased under lease terms  extending  beyond the end of 2000,
so that no rent  reductions due to vacancies are expected for the balance of the
year nor are significant rent increases  likely,  absent early termination of an
existing  lease and a releasing.  Revenues  will vary slightly due to changes in
the amount of expenses reimbursable under net leases.

      Total operating expenses for the six months ended June 30, 2000, increased
to $343,505 from  $298,069  during the six months ended June 30, 1999, or 15.2%.
While most operating expenses showed expected  variations due to variable costs,
such as utilities and insurance, administrative costs increased from $36,785 for
the six months ended June 30, 1999, to $61,186 for the six months ended June 30,
2000.  This  increase  was due  primarily  to the  increased  costs  of  outside
accounting and legal services that are associated with the public company status
of the Company.  Operating  expenses  also  increased  because of  approximately
$7,000 in parking lot resurfacing and restripping at the Orchard Supply Shopping
Center that was expensed as a repair  during the six months ended June 30, 2000.
Management  fees also  increased  from  $7,500  per month to  $10,000  per month
commencing  June 1, 2000,  pursuant to the terms of the written  management  fee
agreement.

      Net interest  expense for the six months ended June 30, 1999, was $455,946
and increased to $471,369 for the six months ended June 30, 2000,  or 3.8%,  due
primarily  to increases in the prime  interest  rate on the Eccles  Project loan
with Redwood  Bank,  together  with the $12,413 paid as a loan  extension fee in
connection with the Gross Mortgage Company loan.

  Quarter ended June 30, 2000 and 1999:

      The Company's net loss for the three months ended June 30, 2000, decreased
to $29,383 from $31,568 for the three months ended June 30, 1999, or 6.9%.

      The  Company's  total  revenues  for the three months ended June 30, 2000,
increased to $357,000 from $345,095 for the three months ended June 30, 1999, or
3.4%.

                                       10
<PAGE>

      Total  operating  expenses  for the  three  months  ended  June 30,  2000,
increased to $170,998 from $148,690 during the three months ended June 30, 1999,
or 15.0%.  While most  operating  expenses  showed  expected  variations  due to
variable  costs,  such as utilities  and  insurance,  the  following  categories
constitute  the  bulk  of  the  $22,308  difference:  (a)  administrative  costs
associated  with the public  company  status of the  Company;  (b)  parking  lot
repaving and  restripping  at the San Ramon  Retail  Center;  and (c)  increased
management fees.

      Net  interest  expense  for the three  months  ended  June 30,  1999,  was
$227,973 and  increased to $239,755 for the three months ended June 30, 2000, or
5.2%,  due  primarily  to  increases  in the prime  interest  rate on the Eccles
Project  loan  with  Redwood  Bank,  together  with the  $12,413  paid as a loan
extension fee in connection with the Gross Mortgage Company loan.

Liquidity and Capital Resources

      The Company has met its requirements  for liquidity and capital  resources
principally   from  cash  provided  by  operations  and  provided  by  financing
activities  that  permitted  partial  realization  of the real  property  equity
appreciation.

  Operating Activities

      Operating  activities for the six months ended June 30, 1999, provided net
cash of $144,303  compared to net cash used in operating  activities for the six
months ended June 30, 2000,  of $1,558,  a decrease of $145,861.  This  decrease
results from a  combination  of factors,  including  decreases in prepaid  rent,
accounts  payable and prepaid  expenses,  together with other  factors.  Noncash
expenses related to depreciation and amortization were $137,943 and $138,258 for
the six  months  ended  1999 and  2000,  respectively,  which  depreciation  and
amortization  more than  offset  the net cash  income  generated  in those  same
periods.

  Investing Activities

      There  was no cash  flow  generated  or used  with  respect  to  investing
activities in the six months ended June 30, 2000 or 1999.

  Financing Activities

      The Company's financing  activities in the six months ended June 30, 2000,
reflect $16,250 expended,  of which $12,413 is attributable to the mortgage loan
extension  fees paid to Gross Mortgage  Company in connection  with the $545,000
mortgage  loan on the San  Ramon  Retail  Center.  On June 1,  2000,  the  Gross
Mortgage  Company loan was extended for six months to December 1, 2000. The loan
was paid in full on August 2, 2000,  with the proceeds  from the  Affinity  Bank
loan, as discussed below.

      For the six months ended June 30, 2000,  financing activities used cash of
$149,034, which represents the reduction in the principal balance of the Redwood
Bank  note as  discussed  below  and the  amortization  of  principal  on  other
indebtedness.  Investing activities for the six months ended June 30, 1999, used
cash of  $19,120,  which  represents  reductions  of  principal  resulting  from
principal amortization.

      On May 31,  2000,  the Company  borrowed  $100,000  from Mr.  Maniar,  the
principal  shareholder  of the  Company,  as  disclosed  in prior  filings.  The
proceeds  of this loan were used to reduce the  principal  of the  Redwood  Bank
mortgage  loan,  which  was  extended  on April 4,  2000,  as  discussed  below.

                                       11
<PAGE>

Subsequent to the close of the second  quarter,  the Company repaid this loan in
full,  together with all accrued interest,  from the proceeds of the refinancing
of the San Ramon Retail Center as discussed below.

      On April 4, 2000,  Redwood Bank recorded a one-year extension of its first
mortgage  loan  encumbering  the Eccles  Project.  The  mortgage had a principal
balance of $1,999,000 at June 30, 1999, and has a reduced  principal  balance of
$1,899,000  as of June 30,  2000.  The  interest  rate on the  mortgage  loan is
variable, at prime plus one percent (1%). The new maturity date is May 31, 2001.

      The Company  distributed $75,222 to Mr. Maniar during the six months ended
June 30, 1999. These  distributions  relate to the distribution of loan proceeds
during the  period  prior to Mr.  Maniar's  sale of the real  properties  to the
Company, and therefore represent  pre-incorporation funds. No distributions have
been made to Mr. Maniar since his sale of the real estate to the Company in June
1999, and no such distributions are planned in the future.

      Subsequent  to the  June  30,  2000,  financial  statements,  the  Company
recorded a new loan on the San Ramon Retail Center from Affinity  Bank.  The new
loan recorded on August 2, 2000, and is in the principal amount of $800,000 with
interest fixed for three years at 9.10% per annum,  with a 30-year  amortization
of principal.  The term of the loan is for 10 years. The loan proceeds were used
to: (a) pay off the $100,000 loan from Mr. Maniar;  and (b) increase the working
capital of the Company.

Eccles Property

      On July 3, 2000, the prospective purchaser of the Eccles Property proposed
either to renegotiate  the purchase terms due to an easement  encroaching on the
Eccles  Property  that the Company had not removed or to terminate  the proposed
purchase.  The Company  believes  that the City of South San  Francisco  may now
approve a 300,000 square foot rather than a 200,000 square foot office  building
as previously  planned.  Such a larger  building would increase  development and
carrying  costs  until  the  building  is  fully  leased  as well as  increasing
potential financial return.

      The Company and the  prospective  purchaser  currently  are  renegotiating
their   agreement  and  discussing  a  possible  joint  venture  to  develop  an
approximately  300,000 square foot office  building.  The prospective  purchaser
would buy a partial  interest rather than the entire  property,  and the Company
and the prospective  purchaser would then convey their  respective  interests in
the property to a joint venture for development. The Company and the prospective
purchaser  would bear their pro rata share of  construction  and other costs, as
well as any financial return from the successful building,  leasing and ultimate
sale of the project after it is completed.  The Company  estimates that it would
cost  approximately  $60.0 million to construct an approximately  300,000 square
foot building.

      If a revised agreement is not reached with the prospective purchaser,  the
Company will continue its plan to sell, exchange, or develop this property.  The
Company believes that a percentage joint venture  ownership  interest in a joint
venture  development of the property could provide a greater long-term financial
return to the Company than an immediate sale of the entire property.

      The Company has reached a  preliminary  understanding  to  extinguish  the
easement to which the prospective  purchaser took exception and anticipates that
a final agreement will be executed by the end of the third quarter of 2000.

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<PAGE>

                           Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         The following exhibits are included as part of this report:

         Exhibit     SEC Reference
         Number      Number           Title of Document
         ----------  --------------  -------------------------------------------
         Item 10                     Material Contracts
         ----------  --------------  -------------------------------------------
         10.01       10              Sand Hill Property Company July 3, 2000,
                                     letter notice and proposed First
                                     Amendment to Purchase and Sale Agreement
                                     between Montgomery Realty Group, Inc.
                                     and Sand Hill Property Company effective
                                     May 2, 2000.

         Item 27                     Financial Data Schedule
         ----------  --------------  -------------------------------------------
         27.01       27              Financial Data Schedule


(b)      Reports on Form 8-K

         During the quarter ended June 30, 2000, the Company filed no reports on
Form 8-K.

                                    Signature

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                                 MONTGOMERY REALTY GROUP, INC.
                                                 (Registrant)



Date: August 10, 2000                            By: /s/ Dinesh Maniar
                                                    --------------------------
                                                    Dinesh Maniar
                                                    President

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